Attached files
Exhibit 10.5
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement"), dated as of the 18th day
of January, 2012 (this "Agreement") is entered into by and among, EARTH DRAGON
RESOURCES INC., a Nevada corporation ("Earth"), and the Owners of PROJECT X,
INC., a Nevada corporation ("Owners"). Earth and the Owners are referred to
singularly as a "Party" and collectively as the "Parties."
WITNESSETH:
WHEREAS, the Owners own all of the issued and outstanding shares of PROJECT
X, INC., a Nevada corporation ("Project X");
WHEREAS, PJTX was formed on June 1, 2011, for the purpose of entering in to
a Joint Venture with Deep Marine Salvage Inc., a Nevis Corporation ("DMS"). The
purpose of the Joint Venture is to engage in the business of locating and
recovering valuable cargo from ships lost throughout the world's oceans. On July
20, 2011, PJTX and DMS entered into a Joint Venture Agreement (the "JV
Agreement") to set forth the terms of the parties' agreement to create and
operate such Joint Venture (the "JV"). The JV's business strategy is to
recover/salvage World War I and World War II commodity cargo shipwrecks that
have been identified by the DMS research team that contain valuable bulk high
value cargos that can be profitably recovered using proprietary recovery
equipment, techniques and procedures developed by Deep Marine Salvage.
WHEREAS, Earth wishes to acquire all of the issued and outstanding shares
and rights to shares of all of the capital stock of Project X (referred to
hereinafter as the "Project X Shares") with the purpose of owning and operating
Project X as its wholly-owned subsidiary; and
WHEREAS, Earth and the Owners propose to enter into this Agreement which
provides, among other things, the Owners will deliver the Project X Shares to
Earth in exchange for the issuance by Earth of a total Eight Million Five
Hundred Seventy Thousand (8,570,000) shares of Earth's common stock as set forth
in Section 2.01 of this Agreement, on the terms and conditions set forth herein
(the "Share Exchange") and such additional items as more fully described in this
Agreement.
NOW, THEREFORE, in consideration, of the promises and of the mutual
representations, warranties and agreements set forth herein, the Parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. The following terms shall have the following
respective meanings:
"Affiliate" with respect to any Party, a Person that directly
or indirectly controls, is controlled by, or is
under common control of such Party. For the
purpose of this definition, "control" means (i)
ownership of more than fifty percent (50%) of the
voting shares of a Person or (ii) the right or
ability to direct the management or policies of a
Person through ownership of voting shares or
other securities, pursuant to a written agreement
or otherwise;
"Business Day" a day (other than a Saturday) on which banks
in Nevada are open for business throughout their
normal business hours;
"Closing" the closing of the transactions contemplated by
this Agreement;
"Completion" completion of acquisition of the Project X Shares
by Earth in accordance with the terms and
conditions of this Agreement;
"Encumbrance" any mortgage, charge, pledge, lien, (otherwise
than arising by statute or operation of law),
equities, hypothecation or other encumbrance,
priority or security interest, preemptive right
deferred purchase, title retention, leasing,
sale-and-repurchase or sale-and-leaseback
arrangement whatsoever over or in any property,
assets or rights of whatsoever nature and
includes any agreement for any of the same and
reference to "Encumbrances" shall be construed
accordingly;
"Exchange Act" the US Securities Exchange Act of 1934;
"Person" any individual, firm, company, government, state
or agency of a state or any joint venture,
association or partnership (whether or not having
separate legal personality);
"Securities Act" the US Securities Act of 1933;
"SEC" the US Securities and Exchange Commission;
"US" United States of America;
"United States Dollars" United States dollars;
or "US$"
Section 1.02. Rules of Construction.
(a) Unless the context otherwise requires, as used in this Agreement: (i)
"including" means "including, without limitation"; (ii) words in the singular
include the plural; (iii) words in the plural include the singular; (iv) words
applicable to one gender shall be construed to apply to each gender; (v) the
terms "hereof," "herein," "hereby," "hereto" and derivative or similar words
refer to this entire Agreement, including the Schedules hereto; (vi) the terms
"Article," "Section" and "Schedule" shall refer to the specified Article,
Section or Schedule of or to this Agreement and references to paragraphs shall
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refer to the relevant paragraph of a specified Schedule and (vii) the term "day"
shall refer to calendar days.
(b) Titles and headings to Articles and Sections are inserted for
convenience of reference only, and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
ARTICLE II
THE SHARE EXCHANGE
Section 2.01. Share Exchange.
(a) Subject to and upon the terms and conditions of this Agreement, on the
Closing Date (as defined hereafter), Earth shall acquire all of the Project X
Shares from the Owners with all of such interests acquired being free from all
Encumbrances together with all rights now or hereafter attaching thereto.
(b) In exchange for the delivery of the Project X Shares, Earth shall
deliver to the Owners a total of Eight Million Five Hundred Seventy Thousand
(8,570,000) restricted shares of Earth's common stock (the "Exchange Shares");
and
(c) The Share Exchange shall take place upon the terms and conditions
provided for in this Agreement and in accordance with applicable law. If the
Closing does not occur as set forth in Section 2.02 of this Agreement due to one
Party's failure to perform, then the other Party may terminate the Agreement.
Section 2.02. Closing Location. The Closing of the Share Exchange and the other
transactions contemplated by this Agreement will occur as soon as possible (the
"Closing Date"), at the offices of W. Scott Lawler - Attorney at Law, in
Chandler, Arizona.
Section 2.03. Owner's Closing Documents. At the Closing, the Owners will tender
to Earth:
(a) Original certificates issued in the names of the Owners representing
all of the Project X Shares duly endorsed for transfer by the Owners and marked
"cancelled for transfer" or as otherwise directed by Earth or its counsel, in
accordance with the laws of the State of Nevada;
(b) One (1) new certificate issued by Project X in the name of Earth
representing the Project X Shares;
(c) A certified copy of the register of shareholders of Project X showing
Earth as the registered owner of the Project X Shares;
(d) A certificate executed by each Owner certifying that the conditions in
Section 8.01(a) have been satisfied.
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Section 2.04. Earth's Closing Documents. At the Closing, Earth will tender to
the Owners:
(a) A certified copy(ies) of resolutions of the Board of Directors of Earth
in a form satisfactory to the Owners, acting reasonably, authorizing:
(i) the execution and delivery of this Agreement by Earth; and
(ii) the issuance of the Exchange Shares to such entities and in such
allocations as set forth on Schedule A attached hereto;
(b) Share certificates, registered in the name of the Owners representing
the Exchange Shares; and
(c) A certificate executed by a duly appointed officer of Earth certifying
that the conditions in Section 9.01(a) have been satisfied.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Each Party represents and warrants to the other Party that each of
the warranties it makes is accurate in all respects and not misleading as at the
date of this Agreement.
Section 3.02. Each Party undertakes to disclose in writing to the other Party
anything which is or may constitute a breach of or be inconsistent with any of
the warranties immediately upon the same coming to its notice at the time of and
after Completion.
Section 3.03. Each Party agrees that each of the warranties it makes shall be
construed as a separate and independent warranty and (except where expressly
provided to the contrary) shall not be limited or restricted by reference to or
inference from the terms of any other warranty or any other term of this
Agreement.
Section 3.04. Each Party acknowledges that the restrictions contained in Section
11.01 (Public Notices) and Section 11.10 (Confidentiality) shall continue to
apply after the Completion under this Agreement without limit in time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EARTH
Section 4.01. Organization, Standing and Authority; Foreign Qualification. Earth
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and authority
to own, lease and operate its properties and to conduct its business as
presently conducted and as proposed to be conducted and is duly qualified or
licensed as a foreign corporation in good standing in each jurisdiction in which
the character of its properties or the nature of its business activities require
such qualification.
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Section 4.02. Corporate Authorization. The execution, delivery and performance
by Earth of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Earth, and this Agreement constitutes a valid and binding agreement of Earth.
The Exchange Shares to be issued in accordance with this Agreement shall be duly
authorized and, upon such issuance, will be validly issued, fully paid and
non-assessable.
Section 4.03. Capitalization. Earth's authorized capital stock, as of January
13, 2012, consists solely of 2,850,000 authorized shares of common stock of
which 510,002 common shares are issued and outstanding, including the Exchange
Shares, and no preferred shares are issued and outstanding. All of such issued
and outstanding shares of Earth's common stock are duly authorized, validly
issued, fully paid and non-assessable. There are no outstanding options,
warrants, agreements or rights to subscribe for or to purchase, or commitments
to issue, shares of Earth's common stock or any other security of Earth or any
plan for any of the foregoing. Earth is not obligated to register the resale of
any of its common stock on behalf of any shareholder of Earth under the
Securities Act.
Section 4.04. Subsidiaries. Earth does not have any subsidiaries.
Section 4.05. SEC Filings.
(a) Earth has delivered to the Owners Earth's Annual Report on Form 10-K
for the fiscal year ended May 31, 2011, containing Earth's consolidated balance
sheet at May 31, 2011, and consolidated statements of income, changes in
stockholders' deficiency and cash flows of Earth for the period from October 23,
2007 (date of inception) to the fiscal year ended May 31, 2011, along with a
copy of the audit report of Michael T. Studer CPA P.C., of Freeport, New York,
independent auditors ("Earth's Reports"). To the best of Earth's knowledge and
belief, Earth's Reports as of its dates (i) comply in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, (ii) do not contain any untrue statement of a material fact, and
(iii) do not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and
(b) All documents which Earth is responsible for filing with the SEC or any
regulatory agency in connection with this Agreement will comply as to form in
all material respects with the requirements of applicable law, and all of the
information relating to Earth in any document filed with the SEC or any other
regulatory agency in connection with this Agreement or the transactions
otherwise contemplated hereby shall be true and correct in all material
respects.
Section 4.06. Financial Statements. All consolidated financial statements
included in Earth's Reports, including the related notes, fairly present, in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as indicated therein), the consolidated financial
position of Earth as of the dates thereof and the consolidated results of
operations and changes in shareholders' equity and cash flows of Earth for the
periods then ended, subject, in the case of the interim financial statements, to
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normal and recurring year-end audit adjustments and except that the interim
financial statements do not contain all of the notes required by GAAP.
Section 4.07. Articles of Incorporation and Bylaws. Earth has heretofore
delivered to the Owners true, correct and complete copies of its Articles of
Incorporation, certified by the Secretary of State of the State of Nevada and
Bylaws or comparable instruments, certified by the corporate secretary thereof.
Section 4.08. No Conflict. The execution, delivery and performance of this
Agreement and the completion of the transactions contemplated herein will not:
(a) violate any provision of the Articles of Incorporation, Bylaws or other
charter or organizational document of Earth;
(b) violate, conflict with or result in the breach of any of the terms of,
result in any modification of the effect of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract to which Earth is a
party or by or to which either of its assets or properties, may be bound or
subject;
(c) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, or any
agreement with, or condition imposed by, any governmental or regulatory body,
foreign or domestic, binding upon Earth or upon the securities, assets or
business of Earth;
(d) violate any statute, law or regulation of any jurisdiction as such
statute, law or regulation relates to Earth or to the securities, properties or
business of Earth; or
(e) result in the breach of any of the terms or conditions of, constitute a
default under, or otherwise cause an impairment of, any permit or license held
by Earth.
Section 4.09. Litigation. There is no litigation, suit, proceeding, action or
claim at law or in equity, pending or to Earth's best knowledge threatened
against or affecting Earth or involving any of Earth's property or assets,
before any court, agency, authority or arbitration tribunal, including, without
limitation, any product liability, workers' compensation or wrongful dismissal
claims, or claims, actions, suits or proceedings relating to toxic materials,
hazardous substances, pollution or the environment. Earth is not subject to or
in default with respect to any notice, order, writ, injunction or decree of any
court, agency, authority or arbitration tribunal.
Section 4.10. Compliance with Laws. To the best knowledge of Earth, it has
complied with all laws, municipal bylaws, regulations, rules, orders, judgments,
decrees and other requirements and policies imposed by any governmental
authority applicable to it, its properties or the operation of its business,
except where the failure to comply will not have a material adverse effect on
the business, properties, financial condition or earnings of Earth.
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Section 4.11. Operations of Earth. Since the latest filing date of Earth's
Reports, Earth has not:
(a) amended its Articles of Incorporation or Bylaws or merged with or into
or consolidated with any other person or entity, subdivided or in any way
reclassified any shares of its capital stock or changed or agreed to change in
any manner the rights of its outstanding capital stock or the character of its
business;
(b) issued, reserved for issuance, sold or redeemed, repurchased or
otherwise acquired, or issued options or rights to subscribe to, or entered into
any contract or commitment to issue, sell or redeem, repurchase or otherwise
acquire, any shares of its capital stock or any bonds, notes, debentures or
other evidence or indebtedness;
(c) declared or paid any dividends or declared or made any other
distributions of any kind to its shareholders; or
(d) made any loan or advance to any of its shareholders or to any of its
directors, officers or employees, consultants, agents or other representatives,
or made any other loan or advance, otherwise than in the ordinary course of
business.
Section 4.12. Material Information. This Agreement, the Schedules attached
hereto and all other information provided, in writing, by Earth or
representatives thereof to the Owners, taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make any statement contained herein or therein not misleading. There are no
facts or conditions which have not been disclosed to the Owners in writing
which, individually or in the aggregate, could have a material adverse effect on
Earth or a material adverse effect on the ability of Earth to perform any of its
obligations pursuant to this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE OWNERS
The Owners represent to Earth as follows:
Section 5.01. Organization, Standing and Authority; Foreign Qualification. (a)
Project X is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as proposed to be conducted and is duly qualified or
licensed as a foreign corporation in good standing in each jurisdiction in which
the character of its properties or the nature of its business activities require
such qualification.
Section 5.02. Authorization. The execution, delivery and performance by the
Owners of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate or other action, as
the case may be, on the part of each Owner. Each Owner has duly executed and
delivered this Agreement and this Agreement constitutes a valid and binding
agreement of each Owner. The Project X Shares to be transferred to Earth in
accordance with this Agreement have been duly authorized and validly issued,
fully paid and non-assessable. Upon transfer of the Project X Shares, no
Encumbrance shall exist on either.
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Section 5.03. Capitalization.
Earth's authorized capital stock, as of January 13, 2012, consists solely of 75
million authorized shares of common stock and 3 million authorized shares of
preferred stock, of which 510,002 common shares of stock are issued and
outstanding, and no preferred shares are issued and outstanding. All of such
issued and outstanding shares of Earth's common stock are duly authorized,
validly issued, fully paid and non-assessable. Except as described on Schedule
4.03, there are no outstanding options, warrants, agreements or rights to
subscribe for or to purchase, or commitments to issue, shares of Earth's common
stock or any other security of Earth or any plan for any of the foregoing. Earth
is not obligated to register the resale of any of its common stock on behalf of
any shareholder of Earth under the Securities Act.
Section 5.04. Subsidiaries. Project X has no subsidiaries.
Section 5.05. Sale of Exchange Shares. Upon completion of the purchase and sale
of the Exchange Shares, the Owners shall be the beneficial and record holder or
holders of the Exchange Shares. Each Owner are acquiring the Exchange Shares as
principal for its own respective account to be held for investment purposes
only, not for the benefit of any other person and not with a view to the resale,
distribution or other disposition of all or any of the Exchange Shares, and each
Owner is delivering concurrently with this Agreement, a certificate in the form
attached to this Agreement as Exhibit A.
Section 5.06. Restriction on Exchange Shares. Each Owner hereby consents to
Earth making a notation on its records or giving instructions to any transfer
agent of the restricted shares portion of the Exchange Shares in order to
implement the restriction on transfer set forth and described herein. The Owners
have been independently advised as to, and are aware of, the restrictions with
respect to trading in the Exchange Shares pursuant to the applicable securities
laws and further agrees that it is solely responsible for compliance with all
such restrictions as set forth in Exhibit A.
Section 5.07. Investment Risk. The Owners understand that an investment in Earth
includes a high degree of risk, have such knowledge and experience in financial
and business matters, investments, securities and private placements as to be
capable of evaluating the merits and risks of their investment in the Exchange
Shares, are in a financial position to hold the Exchange Shares for an
indefinite period of time, and are able to bear the economic risk of, and
withstand a complete loss of such investment in the Exchange Shares.
Section 5.08. Cooperation. If required by applicable securities laws or order of
a securities regulatory authority, stock exchange or other regulatory authority,
the Owners will execute, deliver, file and otherwise assist Earth in filing such
reports, undertakings and other documents as may be required with respect to the
issuance of the Exchange Shares.
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Section 5.09. Tax Advice. The Owners are responsible for obtaining such legal,
including tax, advice as it considers necessary or appropriate in connection
with the execution, delivery and performance by it of this Agreement and the
transactions contemplated herein.
Section 5.10. Investment Representations. All of the acknowledgements,
representations, warranties and covenants set out in Exhibit A hereto are true
and correct as of the date hereof and as of the Closing Date as for each Owner.
Section 5.11. No Conflict. The execution, delivery and performance of this
Agreement and the completion of the transactions contemplated herein will not:
(a) violate any provision of the Articles or Certificate of Incorporation,
Bylaws or other charter or organizational document of Project X;
(b) violate, conflict with or result in the breach of any of the terms of,
result in any modification of the effect of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract to which Project X or
any of the Owners is a party or by or to which either of their assets or
properties, including the Project X Shares, may be bound or subject;
(c) violate any order, judgment, injunction, award or decree of any court,
arbitrator or governmental or regulatory body against, or binding upon, or any
agreement with, or condition imposed by, any governmental or regulatory body,
foreign or domestic, binding upon Project X or any of the Owners or upon the
securities, assets or business of Project X and/or any of the Owners;
(d) violate any statute, law or regulation of any jurisdiction as such
statute, law or regulation relates to Project X and/or the Owners or to the
securities, properties or business of Project X and/or any of the Owners; or
(e) result in the breach of any of the terms or conditions of, constitute a
default under, or otherwise cause an impairment of, any permit or license held
by Project X and/or any of the Owners.
Section 5.12. Articles of Incorporation and Bylaws.
(a) The Owners have heretofore delivered to Earth true, correct and
complete copies of each of Project X's respective Articles of Organization.
(b) The minute books of Project X accurately reflect all actions taken at
all meetings and consents in lieu of meetings of its respective members or
owners, and all actions taken at all meetings and consents in lieu of meetings
of its managing members from the date of incorporation to the date hereof.
Section 5.13. Compliance with Laws. To the best of the Owners' knowledge,
neither Project X nor any of the Owners are in violation of any applicable
order, judgment, injunction, award or decree nor are they in violation of any
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federal, state, local or foreign law, ordinance or regulation or any other
requirement of any governmental or regulatory body, court or arbitrator, other
than those violations which, in the aggregate, would not have a material adverse
effect on Project X or the Owners and have not received written notice that any
violation is being alleged.
Section 5.14. Material Information. This Agreement, the Schedules attached
hereto and all other information provided in writing by the Owners or
representatives thereof to Earth, taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
any statement contained herein or therein not misleading. There are no facts or
conditions which have not been disclosed to Earth in writing which, individually
or in the aggregate, could have a material adverse effect on Project X and/or
the Owners or a material adverse effect on the ability of the Owners to perform
any of their obligations pursuant to this Agreement.
Section 5.15. Actions and Proceedings. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving Project X or the
Owners. There are no actions, suits or claims or legal, regulatory,
administrative or arbitration proceedings pending or, to the knowledge of the
Owners, threatened against or involving Project X or the Project X Shares.
Section 5.16. Operations. Except as contemplated by this Agreement, since their
respective date of organization, Project X has not:
(a) amended its Certificate or Articles of Organization or merged with or
into or consolidated with any other person or entity, subdivided or in any way
reclassified any of its ownership interests or changed or agreed to change in
any manner the rights of its ownership interests or the character of its
business;
(b) issued, reserved for issuance, sold or redeemed, repurchased or
otherwise acquired, or issued options or rights to subscribe to, or entered into
any contract or commitment to issue, sell or redeem, repurchase or otherwise
acquire, any ownership interests or any bonds, notes, debentures or other
evidence or indebtedness; or
(c) made any loan or advance to any manager, officer, director or employee,
consultant, agent or other representative.
ARTICLE VI
COVENANTS AND AGREEMENTS OF OWNERS
Section 6.01. Conduct of Businesses in the Ordinary Course. From the date of
this Agreement to the Closing Date, the Owners shall cause Project X to conduct
its business substantially in the manner in which it is currently conducted.
Section 6.02. Preservation of Permits and Services. From the date of this
Agreement to the Closing Date, the Owners shall cause each of Project X to use
its best efforts to preserve any permits and licenses in full force and effect
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and to keep available the services, and preserve the goodwill, of its present
managers, officers, employees, agents, and consultants.
Section 6.03. Conduct Pending the Closing Date. From the date of this Agreement
to the Closing Date: (a) the Owners shall cause each of Project X to use its
best efforts to conduct its affairs in such a manner so that, except as
otherwise contemplated or permitted by this Agreement, the representations and
warranties contained in Article V shall continue to be true and correct on and
as of the Closing Date as if made on and as of the Closing Date; and (b) the
Owners shall promptly notify Earth of any event, condition or circumstance that
would constitute a violation or breach of this Agreement by any of the Owners.
Section 6.04. Corporate Examinations and Investigations. Prior to the Closing
Date, Earth shall be entitled, through its employees and representatives, to
make such reasonable investigation of the assets, liabilities, properties,
business and operations of Project X, and such examination of the books,
records, tax returns, results of operations and financial condition of each. Any
such investigation and examination shall be conducted at reasonable times and
under reasonable circumstances and the Owners and its employees and
representatives, including without limitation, their counsel and independent
public accountants, shall cooperate fully with such representatives in
connection with such reasonable review and examination.
ARTICLE VII
COVENANTS AND AGREEMENTS OF EARTH
Section 7.01. Conduct of Businesses in the Ordinary Course. From the date of
this Agreement to the Closing Date, Earth shall conduct its businesses
substantially in the manner in which it is currently conducted.
Section 7.02. Preservation of Permits and Services. From the date of this
Agreement to the Closing Date, Earth shall use its best efforts to preserve any
permits and licenses in full force and effect and to keep available the services
of its respective present officers, employees, consultants and agents and to
preserve their goodwill.
Section 7.03. Litigation. From the date of this Agreement to the Closing Date,
Earth shall notify the Owners of any actions or proceedings of the type
described in Section 4.09 that are threatened or commenced against Earth or
against any officer, director, employee, properties or assets of Earth and of
any requests for information or documentary materials by any governmental or
regulatory body in connection with the transactions contemplated hereby.
Section 7.04. Conduct of Earth Pending the Closing. From the date hereof through
the Closing Date:
(a) Earth shall use its best efforts to conduct its affairs in such a
manner so that, except as otherwise contemplated or permitted by this Agreement,
the representations and warranties contained in Article IV shall continue to be
true and correct on and as of the Closing Date as if made on and as of the
Closing Date; and
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(b) Earth shall promptly notify the Owners of any event, condition or
circumstance occurring from the date hereof through the Closing Date that would
constitute a violation or breach of this Agreement by Earth.
Section 7.05. Corporate Examinations and Investigations. Prior to the Closing
Date, the Owners shall be entitled, through their employees and representatives,
to make any investigation of the assets, liabilities, properties, business and
operations of Earth; and such examination of the books, records, tax returns,
results of operations and financial condition of Earth. Any such investigation
and examination shall be conducted at reasonable times and under reasonable
circumstances and Earth and its employees and representatives shall cooperate
fully with such representatives in connection with such reasonable review and
examination.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF EARTH TO CLOSE
The obligations of Earth to be performed by it at the Closing pursuant to this
Agreement are subject to the fulfillment on or before the Closing Date, of each
of the following conditions, any one or more of which may be waived by it, to
the extent permitted by law:
Section 8.01. Representations and Covenants.
(a) The representations and warranties of the Owners contained in this
Agreement shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date, except that any
of such representations and warranties that are given as of a particular date
and relate solely to a particular date or period shall be true as of such date
or period; and
(b) The Owners shall have performed and complied with all covenants and
agreements required by this Agreement to be performed or complied with by them
on or before the Closing Date. The Owners shall have delivered to Earth a
certificate, dated the Closing Date, and signed by each Owner to the foregoing
effect.
Section 8.02. Governmental Permits and Approvals.
(a) All approvals, authorizations, consents, permits and licenses from
governmental and regulatory bodies required for the transactions contemplated by
this Agreement and to permit the business currently carried on by Project X to
continue to be carried on substantially in the same manner immediately following
the Closing Date shall have been obtained and shall be in full force and effect,
and Earth shall have been furnished with appropriate evidence, reasonably
satisfactory to them, of the granting of such approvals, authorizations,
consents, permits and licenses; and
(b) There shall not have been any action taken by any court, governmental
or regulatory body then prohibiting or making illegal on the Closing Date the
transactions contemplated by this Agreement.
Section 8.03. Third Party Consents. All consents, permits and approvals from
parties to contracts with Project X that may be required in connection with the
performance by the Owners hereunder or the continuance of such contracts in full
force and effect after the Closing Date, shall have been obtained.
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Section 8.04. Litigation. No action, suit or proceeding shall have been
instituted and be continuing or be threatened by any person to restrain, modify
or prevent the carrying out of the transactions contemplated hereby, or to seek
damages in connection with such transactions, or that has or could have a
material adverse effect on Project X or on the Project X Shares.
Section 8.05 Closing Documents. The Owners shall have executed and delivered the
documents described in Section 2.03 above.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE OWNERS TO CLOSE
The obligations of the Owners to be performed by them at the Closing pursuant to
this Agreement are subject to the fulfillment, on or before the Closing Date, of
each the following conditions, any one or more of which may be waived by it, to
the extent permitted by law:
Section 9.01. Representations and Covenants.
(a) The representations and warranties of Earth contained in this Agreement
shall be true and correct on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except that any of such
representations and warranties that are given as of a particular date and relate
solely to a particular date or period shall be true as of such date or period;
and
(b) Earth shall have performed and complied with all covenants and
agreements required by this Agreement to be performed or complied with by it on
or before the Closing Date. Earth shall have delivered to the Owners a
certificate dated the Closing Date, and signed by an authorized signatory of
Earth to the foregoing effect.
Section 9.02. Governmental Permits and Approvals.
(a) All approvals, authorizations, consents, permits and licenses from
governmental and regulatory bodies required for the transactions contemplated by
this Agreement and to permit the business currently carried on by Earth to
continue to be carried on substantially in the same manner immediately following
the Closing Date shall have been obtained and shall be in full force and effect,
and the Owners shall have been furnished with appropriate evidence, reasonably
satisfactory to them, of the granting of such approvals, authorizations,
consents, permits and licenses; and
(b) There shall not have been any action taken by any court, governmental
or regulatory body then prohibiting or making illegal on the Closing Date the
transactions contemplated by this Agreement.
Section 9.03. Litigation. No action, suit or proceeding shall have been
instituted and be continuing or be threatened by any person to restrain, modify
or prevent the carrying out of the transactions contemplated hereby, or to seek
damages in connection with such transactions, or that has or could have a
material adverse effect on Earth.
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Section 9.04. Closing Documents. Earth shall have executed and delivered the
documents described in Section 2.04 above.
ARTICLE X
TERMINATION
Section 10.01. Termination.
(a) Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the Share Exchange and the other transactions
contemplated by this Agreement shall be abandoned at any time prior to the
Closing:
(i) by mutual written consent of the Owners and Earth;
(ii) by either the Owners or Earth in the event that a temporary
restraining order, preliminary or permanent injunction or other judicial order
preventing the consummation of the Share Exchange or any of the other
transactions contemplated hereby shall have become final and non-appealable;
provided, that, the party seeking to terminate this Agreement pursuant to this
clause (ii) shall have used all commercially reasonable efforts to have such
order, injunction or other order vacated;
(iii) by Earth if Earth is not then in material breach of this
Agreement and if there shall have been any breach by the Owners (which has not
been waived) of one or more of its representations or warranties, covenants or
agreements set forth in this Agreement, which breach or breaches (A) would give
rise to the failure of a condition set forth in Article VIII, and (B) shall not
have been cured within thirty (30) days following receipt by the Owners of
written notice of such breach, or such longer period in the event that such
breach cannot reasonably be expected to be cured within such 30-day period and
the Owners are diligently pursuing such cure;
(v) by the Owners if the Owners are not then in material breach of
this Agreement and if there shall have been any breach by Earth (which has not
been waived) of one or more of its representations or warranties, covenants or
agreements set forth in this Agreement, which breach or breaches (A) would give
rise to the failure of a condition set forth in Article IX, and (B) shall not
have been cured within thirty (30) days following receipt by Earth of written
notice of such breach; or
(b) In the event of termination by the Owners or Earth pursuant to this
Section 10.01, written notice thereof shall forthwith be given to the other
Party and the transactions contemplated by this Agreement shall be terminated,
without further action by any Party. If the transactions contemplated by this
Agreement are terminated as provided herein, the Owners shall immediately cause
each of nominees appointed to the Board of Directors of Earth and/or appointed
as officers of Earth to resign from all such positions.
Section 10.02. Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in Section 10.01,
this Agreement shall become null and void and of no further force and effect,
except for the provisions of (i) Section 10.01 and this Section 10.02; (ii)
Section 11.15 relating to certain expenses; and (iii) Section 11.01 relating to
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publicity. Nothing in this Section 10.02 shall be deemed to release any Party
from any liability for any breach by such Party of the terms, conditions,
covenants and other provisions of this Agreement or to impair the right of any
Party to compel specific performance by any other Party of its obligations under
this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Public Notices. The Parties agree that all notices to third
parties and all other publicity concerning the transactions contemplated by this
Agreement shall be jointly planned and coordinated and no Party shall act
unilaterally in this regard without the prior approval of the others, such
approval not to be unreasonably withheld.
Section 11.02. Time. Time shall be of the essence hereof.
Section 11.03. Notices. Any notice or other writing required or permitted to be
given hereunder or for the purposes hereof shall be sufficiently given if
delivered or faxed to the Party to whom it is given or, if mailed, by prepaid
registered mail addressed to such Party at:
If to the Owners, at:
1666 Garnet Ave., Suite 212
San Diego, CA 92109
If to Earth, at:
or at such other address as the Party to whom such writing is to be given shall
have last notified to the Party giving the same in the manner provided in this
article. Any notice mailed shall be deemed to have been given and received on
the fifth Business Day next following the date of its mailing unless at the time
of mailing or within five (5) Business Days thereafter there occurs a postal
interruption which could have the effect of delaying the mail in the ordinary
and usual course, in which case any notice shall only be effectively given if
actually delivered or sent by telecopy. Any notice delivered or faxed to the
Party to whom it is addressed shall be deemed to have been given and received on
the Business Day next following the day it was delivered or faxed.
Section 11.04. Governing Law; Venue; Submission to Jurisdiction. This Agreement
shall be governed by and construed and enforced in accordance with, the internal
laws of the State of Nevada without regard to the conflict of laws principles
thereof as the same apply to agreements executed solely by residents of the
State of Nevada and wholly to be performed within the State of Nevada. Each of
the Parties submits to the jurisdiction of any state or federal court sitting in
the State of Nevada in any action or proceeding arising out of or relating to
this Agreement, agrees that all claims in respect of the action or proceeding
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may be heard and determined in any such court, and agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any other
court. Each of the Parties waives any defense or inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with respect
thereto.
Section 11.05. Severability. If a court of competent jurisdiction determines
that any one or more of the provisions contained in this Agreement is invalid,
illegal or unenforceable in any respect in any jurisdiction, the validity,
legality and enforceability of such provision or provisions shall not in any way
be affected or impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby, unless in either case as a
result of such determination this Agreement would fail in its essential purpose.
Section 11.06. Entire Agreement. This Agreement constitutes the entire agreement
between the Parties and supersedes all prior agreements and understandings, oral
or written, by and between any of the Parties with respect to the subject matter
hereof.
Section 11.07. Further Assurances. The Parties shall with reasonable diligence,
do all such things and provide all such reasonable assurances as may be required
to consummate the transactions contemplated by this Agreement, and each Party
shall provide such further documents or instruments required by the other Party
as may be reasonably necessary or desirable to give effect to the purpose of
this Agreement and carry out its provisions whether before or after the Closing
Date.
Section 11.08. Assignment, Successors and Assigns. Neither Party may assign
(directly, or indirectly by way of merger, amalgamation, stock sale or any
similar procedure) any of its rights or obligations hereunder.
Section 11.09. Waiver. Except as provided in this Article, no action taken or
inaction pursuant to this Agreement will be deemed to constitute a waiver of
compliance with any warranties, conditions or covenants contained in this
Agreement and will not operate or be construed as a waiver of any subsequent
breach, whether of a similar or dissimilar nature. No waiver of any right under
this Agreement shall be binding unless executed in writing by the Party to be
bound thereby.
Section 11.10. Counterparts. This Agreement may be executed in as many
counterparts as may be necessary or by facsimile and each such counterpart
agreement or facsimile so executed shall be deemed to be an original and such
counterparts and facsimile copies together shall constitute one and the same
instrument and shall be valid and enforceable.
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IN WITNESS WHEREOF the Parties hereto have set their hand and seal as of the day
and year first above written.
EARTH DRAGON RESOURCES INC., "OWNERS"
a Nevada corporation
By: /s/ Thomas Herdman /s/ J. Michael Johnson
----------------------------- -----------------------------------
Name: Thomas Herdman Name: J. Michael Johnson
Title: President
/s/ Jason Sunstein
-----------------------------------
Name: Jason Sunstein
/s/ Ralph Phillips
-----------------------------------
Name: Ralph Phillips
/s/ Scott Heimdal
-----------------------------------
Name: Scott Heimdal, President
Oceanic Research and Recovery, Inc.
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